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Directv CEO Says Possible Merger with Dish "Could Be Pro-Consumer"

DirecTV CEO Michael White kept the ember of this long-standing idea burning this morning at the Goldman Sachs Annual Communicopia Conference. “Consolidation could be pro-consumer, perhaps,” he told investors citing, among other things, the soaring programming costs for DirecTV and other pay TV providers.

White’s not the only person who likes the idea of a DirecTV-Dish combination. “A merger would be great news for both DirecTV and Dish Network” — although the cost savings they’d find “would have to be shared with customers” — Bernstein Research’s Craig Moffett says this morning. The big question is whether a deal might pass muster with the FCC and antitrust officials. If Mitt Romney’s in the White House then “we’ll bet on a formally proposed merger within a year,” Moffett says. But even if President Obama is re-elected “we’ll bet they try it before four years are out.”

It really wouldn't be pro-consumer for at least a decade. See the Sirius and XM merger, they only came out with a radio that could receive ALL stations from BOTH sets of satellites this year, and they have been merged for 3+ years. And that is a car antenna, not a dish that needs to be specifically pointed to a certain arc.

Customers won't be seeing any advantages until contracts start to be re-negotiated at best, and Dish customers still won't be seeing NFL Sunday Ticket any time soon.

The only advantage I see here is that when negotiating contracts, they will have 34 million customers as leverage.

The only advantage I see here is that when negotiating contracts, they will have 34 million customers as leverage.

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And when there is a carriage dispute, there will be 34 million upset customers, many of whom will have no other alternative. At least now, everyone who wants AMC, the Big 10 Network or ST has the option of switching to DirecTV, and everyone who wants the PAC 12 network has the option of switching to Dish.

The only advantage I see of a merger is that there are a finite number of CONUS orbital slots and a finite number of transponders that can be parked in those slots. Reducing the duplication of what is being transmitted from those slots could open up more possibilities, but it will take many years before duplicates can be turned off because of the cost of replacing the existing equipment. How long has SD and HD been duplicated, and how many more years will SD be around. I cannot see a merged DirecTV/Dish suddenly replacing everyone's receivers and dishes so that satellite space can be freed up to offer more programing.

Really? This again? They blocked it in 2002/2003. Why would things be any different now?

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Because since then, the following things have happened:

- They allowed the Sirius/XM Merger. This is the most compelling evidence that the FCC and other authorities do not mind a merger that creates a 100% monopoly in 1 service type, in this case satellite radio. Where with DirecTV/Dish, you can at least get 80% or so of offering through cable or telco's - and in some instances more than DBS - you cannot do that with Satellite Radio, especially not in your car.

- They allowed the SBC/AT&T Merger. Not that this directly compares to a Dish/DirecTV merger, but it is an example of how the FCC and other government bodies are becoming a little more lenient in big companies merging in to a huge company. Additionally, of course, AT&T was split up in the 80ties, and this was seen as a first step to bring back the Big Bell.

- Media content/station owners have been asking MUCH higher increases in carriage fees to try and offset their loss of advertising income over the last 3 years or so, resulting in a number of carriage disputes. A merger would give them a lot more leverage to bring price-per-subscriber carriage fees down.

In short: The market has significantly shifted in 10 years. There is a lot more chances of a merger happening in CURRENT market conditions than there was 10 years ago.

I'm still not convinced though. Sirius/XM was held to no price increases for 3 years (I think), but they managed to add other fees and raise existing fees outside of the regular price, so they still managed to squeeze more money out of customers by utilizing sneaky ways around what was on paper. I can see DirecTV/Dish doing the same. Sure the price will stay the same for 5 years, we promise.... oh by the way, your equipment fee is going up from $6 to $8 and your DVR fee is going up from $10 to $15. But our main package price will stay the same as promised.

- They allowed the Sirius/XM Merger. This is the most compelling evidence that the FCC and other authorities do not mind a merger that creates a 100% monopoly in 1 service type, in this case satellite radio. Where with DirecTV/Dish, you can at least get 80% or so of offering through cable or telco's - and in some instances more than DBS - you cannot do that with Satellite Radio, especially not in your car.

- They allowed the SBC/AT&T Merger. Not that this directly compares to a Dish/DirecTV merger, but it is an example of how the FCC and other government bodies are becoming a little more lenient in big companies merging in to a huge company. Additionally, of course, AT&T was split up in the 80ties, and this was seen as a first step to bring back the Big Bell.

- Media content/station owners have been asking MUCH higher increases in carriage fees to try and offset their loss of advertising income over the last 3 years or so, resulting in a number of carriage disputes. A merger would give them a lot more leverage to bring price-per-subscriber carriage fees down.

In short: The market has significantly shifted in 10 years. There is a lot more chances of a merger happening in CURRENT market conditions than there was 10 years ago.

I'm still not convinced though. Sirius/XM was held to no price increases for 3 years (I think), but they managed to add other fees and raise existing fees outside of the regular price, so they still managed to squeeze more money out of customers by utilizing sneaky ways around what was on paper. I can see DirecTV/Dish doing the same. Sure the price will stay the same for 5 years, we promise.... oh by the way, your equipment fee is going up from $6 to $8 and your DVR fee is going up from $10 to $15. But our main package price will stay the same as promised.

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Heres where I disagree and don't see how they can. IIRC, the justification for not allowing the merger to go through last time was in large part over rural areas and the lack of competition those areas had along with the fact that Ergen and co. wouldn't put forth a legitimate explanation of how this wouldn't harm those subs. In that vein, nothing much has changed. I sincerely doubt cable and FIOS have reached those areas in the last 10 years. There are no real viable alternatives to a TV signal that have become available.

SXM, while I do not like what it has become I felt like legally they should be allowed to merge. It was am emerging technology that wasn't RELIED UPON by millions of people and a monopoly could really do damage. There were and are too many other ways to get live radio service. Broadcast, apps, internet streams, etc. TV still doesn't have this in that form yet.

Same for the phone. The court broke up AT&T in 1984, right? Well, there were so many other ways for people to communicate with a phone that it was no longer deemed a monopoly.

There would have to be a number of significant technology and infrastructure changes to even make that work.

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If the Sirius/XM merger proved to be a model, initially both companies' technology would be kept running, independent and separate. The company would be rebranded with a common name but you'd either get your programming from Dish's or DirecTV's set of satellites (the Sirius and XM satellites are in two incompatible orbits).

Eventually, you'd go down to one set of satellites and one system of transmission. In the Sirius/XM situation, they have chosen to go with XM's satellites. That transition hasn't happened yet.

To integrate two disparate technologies together would be mind boggling hard. It would be better to go down to one standard.